Ask Taxgirl: $ 10,000 SALT Cap & Vacation Homes


Taxpayer Q:

Dear Taxgirl,

Does the $ 10k SALT limit include property tax on vacation (not on lease) property?

Taxgirl said:

I have received some changes on this issue. I will answer your question first, then enter the second question.

A short answer to your question is affirmative, and the ceiling applies to these facts. This is different from the result of the rent issue. Let me explain.


The applicable part of the new tax code is the same as before 11042, some of which states:

… The total tax due for tax years under paragraphs (1), (2) and (3) of paragraphs (a) and (5) of this paragraph may not exceed $ 10,000 (the case of a single married individual applying for restitution of $ 5,000).

(Emphasis added)

This means that section 164 of the Tax Code is amended to limit the sum of certain state and local taxes, including real estate taxes. However, rent-related taxes are exempt from the cap because they relate to the trade or business or activity described in section 212 (Production or income).

For a long holiday (not to be rented out), the property is not a business, not a revenue for production, meaning it can not be waived and it is capped. This ceiling applies to the total State and Local Taxes stated in Schedule A – this is where you report Property Tax on your (not leased) property on leave. For more information on Schedule A changes, click here.

This gives me a very welcome change on this issue: Can you throw in a limited (or leased) property into a limited liability company or other company to avoid a ceiling?

Before I answer this question, let me tell you a story. When I was a little girl, I wanted to be a black dancer (or a blocker). My friends are cl, they are wearing these amazing dresses, the skirt below is upright. I am too envious I implore my mom to let me learn a lesson, but we do not have such money. My heart broke my mom did not go to school, but gave me a Kelly green plaid, there is a sweater below. It used to be pretty. I often wear it. This is the dress I wear. But, as gorgeous as the dress, it did not make me a blocker.

You know what’s going on, I’m sure. You can dress up your own private property at a limited liability company or other company, but that does not make it a business. Unless you are going to take steps to formally turn it into trade or business – remember, the IRS thinks one of the main motivations for business should be making money – you have not changed what you mean. This is not good enough. It is still the property of holidays (not renting) and is not subject to any special tax treatment – just as I am still a poor girl in linen clothes.

For more information on whether a company under the new tax code is reasonable, click here. If your company registration makes sense in your particular situation, please consult your tax professional.

Before you go: be sure to read my disclaimer. Remember, I am a lawyer and we love the disclaimer.

If you have a question, here is how to “ask tax women.”